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Under Armor approves $70 million restructuring plan to boost operational efficiency


In response to the brand’s Q4 FY24 financial results, US-based sportswear brand Under Armors has approved a restructuring plan to enhance the company's financial and operational efficiency. This plan is expected to incur total estimated pre-tax restructuring and related charges of approximately $70 - $90 million, including up to $50 million in cash-related charges.

 The plan also anticipates up to $40 million in non-cash charges, comprising approximately $7 million in employee severance and benefits costs, and $33 million in facility, software, and other asset-related charges and impairments.

The revenues of US-based sportswear brand Under Armor declined by 5 per cent in Q4 FY24, resulting in sales worth $1.3 billion. For the full year 2024, the brand’s revenue decreased by 3 per cent to $5.7 billion. Revenues in North America fell by 8 per cent to $3.5 billion, while international revenues increased by 8 per cent to $2.2 billion. Within the international segment, revenues in the EMEA region grew by 9 per cent, in Asia-Pacific by 6 per cent and  in Latin America by 8 per cent.

The company's net income for the year increased by 8 per cent to $232 million compared to the previous year. Excluding a $50 million earn-out benefit from the sale of the MyFitnessPal platform, adjusted operating income was $310 million.

Kevin Plank, CEO and President, Under Armor, explains, while these actions will pressure the company's top and bottom lines in the near term, there is a significant opportunity to strengthen Under Armor's brand over the next 18 months by focusing on core fundamentals such as product improvement, simplified operations, and enhanced consumer experience. 

Plank also highlights the importance of cost management and strategic implementation to grow the brand and improve shareholder value, without specifying details about potential job cuts.

Looking ahead to fiscal 2025, Under Armor expects revenues to decline at a low-double-digit percentage rate, including a projected 15 per cent to 17 per cent decline in North America as the company resets its business following years of high promotional activities, especially in its direct-to-consumer segment. The international business is expected to see a low-single-digit percentage decline to protect the brand’s strength. The gross margin is expected to improve by 75 to 100 basis points compared to the previous year.


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